An insurance company may by a declaratory judgment action, and after procuring a reservation of rights agreement from one claiming to be insured under its policy, seek a judicial determination of its obligations under the policy and its duty, if any, to defend certain pending actions. The fact that prior to the filing of the action, the conditional agreement to defend the pending suits, and the reservation of rights contract between itself and the putative insured, it had denied coverage does not preclude its change of position in the absence of any facts which would constitute an estoppel against it to do so.
One Maupin, driving an automobile owned by Finch and insured by the appellee Allstate Insurance Company, left the road and collided with a tree, killing the driver and two passengers and injuring another. Actions were filed by the parents of the dead passengers against Maupin and the papers forwarded to Allstate, which returned them with a letter stating in part: "We are not extending coverage to Thomas Maupin [who] did not have other insured's permission to drive the insured vehicle and he does not qualify as an insured under the terms of our policy. We are taking no action in regard to defending the enclosed suits. If you have any questions regarding our denial in this matter, please contact me."
Subsequently, another suit was filed on behalf of the injured passenger, and Allstate and Maupin's administratrix, Mrs. Martin, entered into a reservation of rights agreement which recited that it was to the mutual advantage of the parties that the tort actions not go undefended; that Allstate agreed to afford a defense to the claims under a reservation of rights and the privilege of denying coverage and withdrawing from the defense on 15-day notice. The administratrix reserved the right to contend that the policy applies, but not that any waiver exists.
Allstate then filed a declaratory judgment action against the administratrix, the plaintiff's in the tort claims, State Farm Mutual Auto. Ins. Co., and other insurance companies holding uninsured motorist insurance coverage in the event that no coverage was provided by Allstate. The tort actions were temporarily enjoined. Mrs. Martin, State Farm and United Services Automobile Association, another uninsured motorist insurer, filed motions to dismiss on the ground of lack of justiciable controversy in that "Allstate does not seek guidance as to whether their policy would apply but rather seeks approval of their denial of coverage to Juanita Martin." Affidavits were submitted, the court treated the issue as a motion for summary judgment against Allstate, denied the relief sought, and these appeals result.
We prefer not to get into the area of whether the original letter denying coverage from Allstate to Mrs. Martin was a "condition denial" or a "strict denial," as we do not think this affects the result of this case. Appellants citing Reliance Ins. Co. v. Brooks Lumber Co., 101 Ga. App. 620 (115 SE2d 271)
and like cases, contend that once the insurer has denied coverage the uncertainty has ended and the right to declaratory judgment along with it, since that right is given not as an approval of past conduct but with respect to the propriety of a future act where, without such guidance, the plaintiff's interest might be jeopardized. It represents a signal for the future, not a seal of approval (or otherwise) for the past.
The Brooks Lumber Company case affirmed the dismissal of the insurance company s action for summary judgment because of its prior unqualified refusal to pay the loss. The case is based on the logic that the insurer may not refuse to pay and then use declaratory judgment procedure as a means of avoiding bad faith penalties. In Gant v. State Farm &c. Ins. Co., 109 Ga. App. 41 (134 SE2d 886)
there was a pending action and no showing whether the company was or was not defending. The court reasoned that if the company was not defending it had elected to stand on a no-coverage defense. If it was defending "it must appear that the defense is afforded under a reservation of rights, for otherwise the rights of the parties have accrued in that situation." But in the present case the insurer is defending under a reservation of rights, and the two pitfalls of Gant are avoided.
It seems to us that the appellants are really urging, not that Allstate is presently failing and ref using to defend against the cases, and not that it is defending without a reservation of rights (either one of which would bar it from this action) but that, having issued an original statement that it was not liable and would not defend, it was forever precluded from a change of course. The mere entry into a reservation of rights agreement is not such a final decision as will preclude the suit. Ga. Cas. & Surety Co. v. Turner, 86 Ga. App. 418 (71 SE2d 773)
. Had Allstate rested on its denial of coverage it could not, of course have followed this procedure, but it did not do so. The original letter created no estoppel; Mrs. Martin is not relying upon it as representing any benefit to herself, and in fact she also participated in its supersession by signing the reservation of rights contract for defending. State Farm, the insurer of one of the plaintiffs in the tort action, suffered no detriment of which it can complain as a result of Allstate's reassessment of its legal position. The question of coverage is still in issue, and the trial court properly denied the motion to dismiss the declaratory judgment complaint.
Judgment affirmed. Eberhardt, P. J., and Stolz. J., concur.